An Analysis of Rick Santorum's Tax Plan

After evaluating Mitt Romney's, Newt Gingrich's, Rick Perry's, and Herman Cain's proposals, the Tax Policy Center (TPC) has put out another analysis of a Republican presidential candidate's plan, this time Rick Santorum. Santorum's plan includes a number of changes to the tax code, although he doesn't restructure the system like Gingrich, Perry, or Cain.

On the individual side, he:

  • Pares down the number of tax brackets to two rates of 10 and 28 percent
  • Repeals the tax increases in the Affordable Care Act
  • Repeals the AMT
  • Eliminates the estate tax
  • Lowers capital gains and dividends rates to 12 percent
  • Triples the exemption for dependent children
  • Eliminates all marriage penalties
  • Otherwise extends the 2001/2003 tax cuts

On the corporate side, he:

  • Cuts the corporate tax rate to 17.5 percent and eliminates the tax for manufacturers
  • Allows businesses to write off the cost of equipment purchases immediately
  • Increases the R&D tax credit from 14 to 20 percent and makes it permanent
  • Allows firms to permanently repatriate funds from overseas at a 5.25 percent rate, or 0 percent if those funds are invested in plants or equipment

As one would expect, these changes come with a large price tag. TPC estimates staggering revenue losses for Santorum in (calendar year) 2015 alone: $1.3 trillion relative to current law and $900 billion relative to current policy (2001/2003 tax cuts are extended). It'd be a tough climb to make up all those lost revenues with spending cuts, much less actually start reducing deficits and debt.